Correlation Between Auxico Resources and Alien Metals

Can any of the company-specific risk be diversified away by investing in both Auxico Resources and Alien Metals at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Auxico Resources and Alien Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Auxico Resources Canada and Alien Metals, you can compare the effects of market volatilities on Auxico Resources and Alien Metals and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Auxico Resources with a short position of Alien Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auxico Resources and Alien Metals.

Diversification Opportunities for Auxico Resources and Alien Metals

0.0

Correlation Coefficient

Auxico Resources  Alien Metals

Pay attention - limited upside

The 3 months correlation between Auxico and Alien is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Auxico Resources Canada and Alien Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alien Metals and Auxico Resources is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Auxico Resources Canada are associated (or correlated) with Alien Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alien Metals has no effect on the direction of Auxico Resources i.e., Auxico Resources and Alien Metals go up and down completely randomly.

Pair Corralation between Auxico Resources and Alien Metals

If you would invest  0.23  in Alien Metals on December 28, 2024 and sell it today you would lose (0.09) from holding Alien Metals or give up 39.13% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Auxico Resources Canada  vs.  Alien Metals

Auxico Resources Canada

Risk-Adjusted Performance

Very Weak

Over the last 90 days Auxico Resources Canada has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward indicators, Auxico Resources is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Alien Metals

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alien Metals are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Alien Metals reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Auxico Resources and Alien Metals

The main advantage of trading using opposite Auxico Resources and Alien Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Auxico Resources position performs unexpectedly, Alien Metals can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Alien Metals will offset losses from the drop in Alien Metals' long position.

The idea behind Auxico Resources Canada and Alien Metals pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.